So, here’s the little budget secret that everyone in higher education tries to hide: it’s called Progression Through the Ranks (PTR).  That’s the name given to the automatic raise professors and librarians get every year, simply based on seniority.  And over the next few years, as we head into genuine zero-budget-increase territory, it’s going to significantly erode institutional purchasing capacity.

Come collective bargaining time, unions and administrations seem to go at it hammer-and-tongs.  “We demand a 2.5% annual pay increase!”  “No, we can’t possibly give more than 1.5%”, etc.  But what neither side tells the public is that these numbers are on top of raises that every professor gets for “passing Go” every year.  You see, there is the “headline” wage raise, and then there is PTR.   The fights you see in public are almost always about the former, and almost never about the latter.  The size of PTR varies from place to place; in most recent agreements I’ve seen it’s between 2 and 3%.  So when you hear that a faculty union has settled for 2%, keep in mind that individual faculty members are getting increases of 4-5% for the length of the agreement.

Some people argue that PTR doesn’t matter because it gets paid for by the savings an institution reaps when a full professor retires, and a cheaper, assistant professor is hired to replace him/her.  It is true, of course, that an institution books about a one-time $60K salary savings each time a professor retires.  But given that the average salary of professors in Canada is about $113,000, an PTR of 2.5%, means the cost of PTR per professor is a shade under $2,800.  Thus, for retirement to cover the cost of PTR, the retirement rate – that is, the percentage of all professors retiring in a given year – would need to be 4.7%.  In reality, at most Canadian universities, that figure is between 2 and 3%, so retirements only eat up about half the cost of PTR.  In practice, all those three-year agreements allegedly worth 2%/year actually cost the institution about 3.5%.

You can kind of see why no one wants to talk about PTR.  It’s in neither the unions nor the administrations’ interest to make it obvious that staff are getting annual salary bumps twice the rate of inflation; both know there would be a backlash.

Unfortunately, that doesn’t cut it anymore, because “2%” agreements are no longer affordable.  A 3-year 2% agreement means 10% higher labour costs at the end of the contract.  In most provinces, total income growth over the next three years from operating grants and tuition fees will be 5%, at best.  How that slack gets made up is anyone’s guess.